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Speaker 1: This is Bloomberg Daybreak here for this Wednesday, the eighth

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Speaker 1: of February, in London. Coming up today, power powers are

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Speaker 1: on the Fed chief tells Bloomberg. More hikes are leaders

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Speaker 1: vanishing hope. The search for quake survivors continues as the

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Speaker 1: death toll nears eight thousand. Full faith and credit. President

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Speaker 1: Biden says the US will not default on its debt,

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Speaker 1: less interest from rhymesing rates bounce back, loan fraud and

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Speaker 1: search will never be the same. Those other stories we're

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Speaker 1: looking at in today's papers, and I'm leanne Geron's plus

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Speaker 1: taking it to the bank in pieces. Troubled lender credit

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Speaker 1: Sweet will pay some banker bonuses in installments. That's all

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Speaker 1: straight ahead on Bloomberg Daybreak Europe on DAB Digital Radio

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Speaker 1: London Bloomberg eleven three oh New York, Bloomberg, Washington, d C,

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Speaker 1: Bloomberg one oh six one, Boston Bloomberg nine sixties, San

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Speaker 1: Francisco cyrus XM Channel one nineteen and around the world

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Speaker 1: Don Bloomberg Radio, dot Com and var the Bloomberg Business Act.

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Speaker 1: Good morning. I'm Stephen Carroll and I'm Caroline Hitker. Here

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Speaker 1: are the stories that we're following today. The Federal Reserve

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Speaker 1: Chair Jerome Powell has told Bloomberg that interest rates need

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Speaker 1: to keep rising to quash inflation, speaking in a question

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Speaker 1: and answer session with our anchor David Rubinstein at the

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Speaker 1: Economic Club of Washington Palace, that that borrowing costs may

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Speaker 1: need to hit a higher peak if the strong labor

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Speaker 1: market persists. The labor market report for January, it kind

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Speaker 1: of shows you why we think that this will be

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Speaker 1: a process that takes a significant period of time. The

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Speaker 1: labor markets extraordinarily strong. If we continue to get, for example,

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Speaker 1: strong labor market reports or higher higher inflation reports, it

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Speaker 1: may well be the case that we have to do

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Speaker 1: more in race high likes more than a priced in.

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Speaker 1: Pala spoke to Bloomberg after Friday's data showed US and

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Speaker 1: lawyers adding five hundred and seventeen thousand new workers in January,

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Speaker 1: while unemployment fell to its lowest level since nineteen sixty nine.

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Speaker 1: The Fed chief also told us he doesn't think inflation

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Speaker 1: will get close to two percent until at least next year. Now,

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Speaker 1: the number of people dead after earthquakes, which have devastated

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Speaker 1: parts of Turkey and Syria is now nearing eight thousand people.

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Speaker 1: Turkey has declared a three month state of emergency in

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Speaker 1: areas hit by two massive earthquakes, giving the government more

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Speaker 1: leeway and rescue and reconstruction efforts, but Syrians fear that

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Speaker 1: aid will not reach those in government control parts of

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Speaker 1: their country. Khalid had Boot Buttty from the Syrian Arab

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Speaker 1: Red Crescent speaks now, but we need heavy equipment, ambulances

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Speaker 1: and fire fighting vehicles. We don't have five fighting vehicles

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Speaker 1: to put out fires. We don't have heavy equipment to

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Speaker 1: conduct rescue operations. There are a lot of issues surfacing

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Speaker 1: now due to the sanctions. That was a seron hour.

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Speaker 1: But Red Crescent and now rescue teams, including those from

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Speaker 1: the UK, are still hopeful of finding missing relatives in

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Speaker 1: the rubble. President Biden has vowed not to let the

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Speaker 1: US default on its debt, with a call for Congress

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Speaker 1: to raise the debt ceiling. The ideas that we're not

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Speaker 1: going to be We're not going to be moved, inder

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Speaker 1: be threatened to default on the debt if we don't respond, folks.

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Speaker 1: The US president heavily focused his Date of the Union

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Speaker 1: speech on economic themes. Biden also called for higher taxes

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Speaker 1: on billionaires and a quadrupling of the tax unstuck by backs. Okay,

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Speaker 1: so that was the state of the union. Let's also

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Speaker 1: talk about earnings this morning. So Sugitision of ours earnings

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Speaker 1: beat estimates as debt traders outperformed. Revenue from buying and

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Speaker 1: selling fixed income products and currencies jumped fifty six percent

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Speaker 1: in the fourth quarter. Overall, stock Jen's net income was

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Speaker 1: one point one six billion euros. That's down thirty year

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Speaker 1: on year in the fourth quarter, but it did beat estimates.

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Speaker 1: The bank, though, has fallen short of a pledge to

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Speaker 1: pay out half of its underlying profits shareholders, in returning

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Speaker 1: about one point eight billion euros through dividends and buy backs.

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Speaker 1: That's only about a third of underlying profit. The firm

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Speaker 1: decided to hold onto a bigger proportion of earnings to

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Speaker 1: strengthen capital credit. Sweez is to pay some of its

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Speaker 1: junior and mid level bankers their bonuses in three installments.

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Speaker 1: Bloomberg also understands that the embattled sender is considering cutting

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Speaker 1: the bonus pool in half for this year. The belt

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Speaker 1: tightening is believed to be more severe than at Wall

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Speaker 1: Street Peers. Separately, in Asia, the Swiss Bank is said

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Speaker 1: to be dialing back some of its stringent anti money

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Speaker 1: laundering controls. This after they do protests from clients and

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Speaker 1: bankers and contributed to staff departures here in the UK,

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Speaker 1: where she seen acts. Many cabinet reshufflers left Conservative MP's

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Speaker 1: unconvinced it will do enough to reset his premiership. The

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Speaker 1: PM has repurposed three government department into four, creating new

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Speaker 1: ministries focused on energy security and science. Grant Shops is

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Speaker 1: taking on a new role as Energy Security Secretary. We'll

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Speaker 1: be looking at how we can make sure that people

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Speaker 1: you know, are able to get cheap, affordable energy and

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Speaker 1: how that can be renewable. So it's it's good for

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Speaker 1: sort of British jobs as well, and then of course

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Speaker 1: exposing it across the world. So very important we get

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Speaker 1: this right. That's Grand Shops speaking there. The reshuffle comes

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Speaker 1: as a leading think tank says it believes the UK

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Speaker 1: will avoid a recession this year. However, the National Institute

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Speaker 1: of Economic and Social Research says one in four UK

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Speaker 1: households will struggle to pay their energy and food bills

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Speaker 1: this year now. Bloomberg's also say that Meta Platforms is

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Speaker 1: asking many of its managers and directors to transition to

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Speaker 1: individual contribute to jobs, or leave the company. More on

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Speaker 1: that story now from Bloomberg's Charlie Pellett. Those sources say

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Speaker 1: the process is known internally as a flattening. Our level

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Speaker 1: managers are sharing the directive with their subordinates incoming weeks,

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Speaker 1: separate from the company's regular performance reviews that are currently underway. Meato,

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Speaker 1: which owns Facebook and Instagram, fired percent of its workforce

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Speaker 1: in November during its first major layoff, and sources say

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Speaker 1: in the months since staff have faced intense anxiety about

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Speaker 1: the potential for future cuts in New York. Charlie Pellett,

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Speaker 1: Bloomberg Daybreak Europe. Okay, so those are top stories this morning.

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Speaker 1: What are the stories that did catch my eye though,

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Speaker 1: that we're reporting on this morning. Is the first all

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Speaker 1: electric Rolls Royce Rolls Royce specter Ar College. Hanna Elliott

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Speaker 1: is the first non Rolls Rose employee to have driven it.

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Speaker 1: There's a great video which you can find online of

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Speaker 1: Hannah's experience of driving it around the wine country in

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Speaker 1: Cape Town. And it's of course quite a big effort

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Speaker 1: for Rolls Royce to have made this change over. They're

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Speaker 1: doing it because BMW sat the targets which owns Rolls Royce.

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Speaker 1: That's targets they wanted, and a signific comportion of car

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Speaker 1: is moving to all electric Rose Rose is doing it

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Speaker 1: by twenty thirty. Did I did kind of laugh when

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Speaker 1: I heard Hannah say, it's just like driving a Rolls Royce.

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Speaker 1: I've never driven a Rolls Royce. Caroline. You know this

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Speaker 1: is not informational, is it. I've never driven a Rolls Royce.

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Speaker 1: But but I love the quote from Taustons who spoke

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Speaker 1: to us not that long ago actually about the move

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Speaker 1: to e vs UM and he talked about technology in

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Speaker 1: the vehicle. We by intention didn't encapsulate a monstrous screen,

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Speaker 1: said the CEO of Rolls Royce. You have other cars

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Speaker 1: for that in your garage? Do you a nice line? Yeah,

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Speaker 1: a very nice life. I mean it's a very it's

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Speaker 1: a very impressive looking beast when you see it. But

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Speaker 1: two doors, I don't get that. Where would you need more? Well,

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Speaker 1: because yeah, getting in and out of cars is pretty

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Speaker 1: tricky if your lady in a skirt. It is the

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Speaker 1: largest doors they've had in as Royce. They are the longest.

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Speaker 1: It is a very large and the sort of the

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Speaker 1: sort of experience that we all are thinking about this morning.

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Speaker 1: All right, that's one of the stories that we are

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Speaker 1: looking at this morning. Let's turn back to more on

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Speaker 1: Jerome Pal's exclusive conversation with Bloomberg's David Rubinstein. So the

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Speaker 1: FED chief using the interview to push the message the

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Speaker 1: Fed may have to put hike higher than what markets

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Speaker 1: have priced in for now. Our market support of Valerie

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Speaker 1: title is with us. Good morning to you, Valerie. Did

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Speaker 1: jerwn Pal managed to convince markets then that rates need

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Speaker 1: to go higher? I don't think that's necessarily what he

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Speaker 1: was out to do yesterday. He did say a statement

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Speaker 1: which the market hung on to that said, if the

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Speaker 1: strong labor data persists, the peak rate may be higher.

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Speaker 1: But look, we already know this. We know the FED

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Speaker 1: is data dependent and a stronger than expected labor market

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Speaker 1: would would cause this component called core services ex housing

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Speaker 1: to be stickier than he expects. And really that is

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Speaker 1: the main component he is setting his eye on. He

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Speaker 1: was asked about his biggest worry of inflation, and it

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Speaker 1: is this component. Will this component continue to soften? It's

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Speaker 1: moderated just slightly, But this is really the component that

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Speaker 1: of inflation that will be driven stickier if the labor

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Speaker 1: markets stays stronger for longer. Clearly that was that was

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Speaker 1: kind of his main concern about the labor market. But

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Speaker 1: but he didn't sound too negative about it. He didn't

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Speaker 1: sound too negative the fact that the labor market is

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Speaker 1: too strong that it's impossible for us to return inflation

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Speaker 1: to target, noting that it's it's a good thing that

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Speaker 1: the labor market is staying strong at the same time

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Speaker 1: we're already seeing moderation and inflation. Yeah, but there was

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Speaker 1: market reaction. I mean, yes, the two years sort of finished,

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Speaker 1: it starts in the tenure up. But there was a

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Speaker 1: reaction in a way that we've not seen before really

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Speaker 1: in recent weeks in the bond market. Well, equities equity

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Speaker 1: seemed to like it because I think we were worried

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Speaker 1: after the hot inflation print on Friday that this reemergence

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Speaker 1: of the hawkish Powell from last summer, remember his Jackson

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Speaker 1: whole speech was very targeted, very hawkish. Would we see

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Speaker 1: this kind of re emergence again? And we really didn't.

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Speaker 1: But so that that's kind of why equities equities really

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Speaker 1: liked it. Fix income. It got a bid right right

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Speaker 1: out of the gate because of his relaxed demeanor to

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Speaker 1: that first question. But we ended the day with yields

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Speaker 1: just just slightly higher. You know, that goes without saying.

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Speaker 1: You know, since it's hot, payroll of print to your

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Speaker 1: yields have risen almost forty five basis points. So there

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Speaker 1: already has been a big repricing uh in in expectations

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Speaker 1: since that that print on Friday. But look, the Valentine's

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Speaker 1: Day February fourteenth is the next CPI print. Uh since

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Speaker 1: we're so data dependent, Since we're so data dependent, it's

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Speaker 1: really going to be down to that print and those

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Speaker 1: components in that print driving it could what point, I

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Speaker 1: wonder does the message is quite clear for now? What

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Speaker 1: point does the fives masters become a bit more nuanced?

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Speaker 1: Do you see? Look, I think if for instance, this

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Speaker 1: core services component season uptick, then the message will change, right, Um,

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Speaker 1: then it will be clear that that this positive message

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Speaker 1: of disinflation from goods into services might not be happening

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Speaker 1: to the extent Powell wa Then the message will definitely change.

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Speaker 1: Do you think there's still a possibility? What is the

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Speaker 1: thinking abound the idea of soft landing for the US,

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Speaker 1: because the strength of the US economy means potentially that's

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Speaker 1: possible for Europe and for the UK much more difficult. Yeah,

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Speaker 1: look again again, this is a cycle, a business cycle

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Speaker 1: like we've never seen it at Palace said it many

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Speaker 1: times that it's almost just we don't know. He's throwing

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Speaker 1: his hands up saying, we're all in uncharted territory here,

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Speaker 1: but we're going to react to the data. So to me,

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Speaker 1: it's it's a very good thing that pal is positive

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Speaker 1: that the economic growth is a good sign, right, because

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Speaker 1: we would be worried and we would be very shaken

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Speaker 1: up if he approached um these positive labor market data,

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Speaker 1: the positive GDP data and him almost saying this can't continue.

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Speaker 1: I need growth to turn a corner because I can't

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Speaker 1: fight inflation without it, and he's not really saying that strongly. Okay,

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Speaker 1: followy t teller Market supporter, thank you very much for

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Speaker 1: talking us through all of the reaction to Jerome Powell's

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Speaker 1: interview there with Blooms David Robinstein coming up next, Less

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Speaker 1: interest from rising interest rates, taxpayers to foot a six

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Speaker 1: hundred forty million dollar fraud bill, and search will never

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Speaker 1: be the same again. Now. The paper review on Blue

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Speaker 1: birdday Break Europe. The news you need to know from

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Speaker 1: today's papers. I'm blue Brookley and Garons joins us in

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Speaker 1: studio with more detail on those stories. Good morning to

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Speaker 1: yu Leanne. Let's start with the Financial Times. The headline

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Speaker 1: reads UK bank chief's accused of failing to pass on

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Speaker 1: interest rate benefits. Stephen, good morning to you. Yes, so

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Speaker 1: this is a story in the FT and it says

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Speaker 1: the heads of the UK's four largest banks have been

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Speaker 1: accused by MPs of really failing to pass on these

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Speaker 1: benefits of higher interest rates to savers. The House of

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Speaker 1: Commons Treasury Select Committee did question senior executives yesterday and

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Speaker 1: they were from Barclay's, HSBC, Lloyd's and nat West, very

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Speaker 1: familiar to us on the high Street about the effect

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Speaker 1: of raising rates on their customers ahead of the announcement

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Speaker 1: of the full year result. Now we do know that

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Speaker 1: these high street banks are going to announce results within

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Speaker 1: the next two weeks and they are expected to come

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Speaker 1: and higher off the back of these rising borrowing costs

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Speaker 1: that we've seen. And according to the FT, rising interest

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Speaker 1: rates have really boosted high street banks net interest margins.

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Speaker 1: The lenders are denying that they had focused on profits

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Speaker 1: over customer welfare, pointing to competitive products. But there's really

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Speaker 1: the government pulling these high street banks over the coals.

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Speaker 1: Yeah it's Harriet Baldwin, isn't it. Who's the chair of

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Speaker 1: that Treasury Select Committee, who was actually on a with

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Speaker 1: us only last week on Bloomberg UK Politics. So yes, interesting,

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Speaker 1: Um how pointed the questions were around those high street

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Speaker 1: big high street lenders. Um having said that there's a

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Speaker 1: big hole in the wallet of the taxpayer. The Times headline,

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Speaker 1: so taxpayers foot six d forty million pound bill four

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Speaker 1: fraudulent loans. Yes, and Caroline and I'll just outline that

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Speaker 1: big hole to youth. So new official figures show potentially

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Speaker 1: fraud and fraudulent COVID loans are costing the taxpayer close

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Speaker 1: to one pound in every six pounds, and that's to

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Speaker 1: cover the losses of this key COVID scheme. The newspaper

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Speaker 1: highlights data which shows the government has paid lenders around

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Speaker 1: one point four billion pounds and this is all under

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Speaker 1: the Bounds Bank loan pandemic scheme. But according to the Times,

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Speaker 1: out of this sum, six hundred and forty million pounds

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Speaker 1: worth of facilities were marked as suspected fraud. Now, under

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Speaker 1: the scheme, businesses could actually borrow up to twenty five

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Speaker 1: percent of annual turno of over of up to fifty

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Speaker 1: thousand pounds with these loans underwritten by the government. Now,

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Speaker 1: you know, the normal checks that we all obviously have

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Speaker 1: to go through, the credit checks, they were sacrificed. And

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Speaker 1: the main reason for this was really to get this

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Speaker 1: money distributed as quickly as possible to make sure businesses

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Speaker 1: didn't go under. And The Times reports among large users

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Speaker 1: of the bounce back loan scheme, actually Caroline Knew pointed

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Speaker 1: to me, Starling Bank has fled the highest proportion of

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Speaker 1: loans as suspected fraud. Okay, leanne At the Wall Street

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Speaker 1: Journal opinion article there with the headline about that technology

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Speaker 1: story that we're all talking about, I tried Microsoft's new

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Speaker 1: AI powered being search will never be the same. Yes, indeed,

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Speaker 1: so the Wall Streets Journal columnists. That's Johanna Stern has

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Speaker 1: been testing out Microsoft's new version of BING. But this

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Speaker 1: is a little bit different because it is now powered

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Speaker 1: by artificial intelligence. Now, Stern makes the point that BING

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Speaker 1: has often been the punchline for a good tech joke,

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Speaker 1: but it's glad to say one thing. She says that

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Speaker 1: this is about to change because she's test tod out

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Speaker 1: this AI version, and she reckons it's smart. This is

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Speaker 1: Bloomberg Daybreak Europe, your morning brief on the stories making

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Speaker 1: I'm Stephen Carroll. Join us again tomorrow morning for all

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